E-Commerce Impacts DCs

Distribution centers are evolving to keep pace with demands of omnichannel retailing
The design and development of DCs is evolving to meet the needs of omnichannel retailing.

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Distribution centers have evolved alongside trends such as just-in-time manufacturing and the rise of overnight shipping. Now they are changing again, this time to accommodate omnichannel consumers.

One of the most prevalent trends is the move to larger centers. New warehouse facilities of more than 250,000 sq. ft. — called “big box” buildings — are today designed and built to accommodate both e-commerce fulfillment operations and traditional store distribution operations under one roof. The need to serve both stores and e-commerce operations from a single location requires additional space for staging different processes.

For example, fulfilling traditional store orders means the distribution center receives and ships large volumes of product at one time. To serve e-commerce customers, the facility must be designed to ship single packages, like a single dress. And many times, orders include individual shipping and packaging instructions, personal notes and even personalized giftwrap.

The new crop of omnichannel-oriented centers also reverses a long-term distribution trend by requiring more people. Technological advancements have made inventory and order processing an increasingly automated system in store-oriented distribution centers, which have become larger while requiring fewer people to run them.

But that level of automation has not caught up to the e-commerce fulfillment world, where an order may include one flash drive rather than a case of them. Picking several of these small items, packaging them and in some cases giftwrapping items is not a process that traditional distribution operations are equipped to handle.

These overarching trends — larger, more complex centers with more people populating them — result in other design changes as new DCs come out of the ground, including:

• More parking: The labor-intensive picking and packing process to fill online orders means more parking for employees, which in turn necessitates a larger overall site.

• Higher ceilings: Standard ceiling clear heights in distribution centers increased from 18 ft. some 25 years ago to 32 ft. about five to 10 years ago as the two limiting factors — racking technology and fire protection systems — improved to allow the higher ceilings. Today, technology readily permits clear heights of 36 ft. to 40 ft., enabling significantly more inventory to be stored in a smaller footprint. That’s an important factor for omnichannel retail distribution, given the larger space needs of facilities and surface parking, as well as the desire to be close to urban centers, where large sites can be costly or simply unavailable.

• Mezzanine spaces: New buildings can typically accommodate two or even three levels of mezzanine for picking, packaging, gift wrapping, returns and other back-office tasks. The extra mezzanine levels also provide a strong driver for higher ceiling clear heights.

• Life systems upgrades: ESFR fire protection systems, driven in the past by inventory, must be geared primarily for employees. New designs must also consider evacuation methods for larger numbers of employees, many working on mezzanine levels.

• HVAC and lighting: In newly built facilities, the omnichannel trend dovetails with another mega-trend in real estate development — the focus on energy efficiency and sustainability. DCs seeking to reduce energy costs are investing in LED lighting for cold storage, efficient HVAC systems, solar power systems and photo sensors that adjust electric light levels based on the available amount of natural light. Prismatic skylights that diffuse sunlight across a wide area for maximum daylight harvesting are ideal for a DC’s large footprint.

• Employee comfort, safety and productivity: HVAC systems are not just geared to lower energy costs, but also occupant comfort and safety. Night purge ventilation ensures high air quality; LED lighting in dock areas ensures appropriate light levels for reading documentation; and more stable temperatures result in environments that maximize worker productivity.

Tripp Eskridge is senior VP at Jones Lang LaSalle, overseeing the firm’s national industrial project and development services practice.

© 2014